Friday, May 30, 2008

The Vertex Sales Tax Report found that 485 U. S. cities increased their sales tax rate, with about 300 increasing an existing tax and the rest adding a new city sales tax. Small communities saw the biggest increases but a number of larger cities such as Phoenix and St. Louis also added to their sales tax. Taxpayers in Colorado, Missour, Texas and Washington were particularly likely to see their city raise taxes. By contrast, South Carolina was the only state to raise its sales tax.

The seemingly insatiable desire for new taxes obviously exists at the local as well as federal level. One can only hope that citizens are getting their money's worth for the extra amounts taken from their pockets.

Wednesday, May 28, 2008

About three years ago, "Tick Marks" got off the ground (the May 2005 archives indicate a somewhat rough takeoff). Thanks for those who read and those who link; your support is greatly appreciated. Congratulations and thanks to the many (though not enough) good blogs of the present. I miss a number of good blogs which have gone dormant and look forward to blogs of the future. June will be somewhat slow (probably one or two posts per week) because of an intense summer school schedule; hopefully I will be able to pick up the pace between Independence Day and my 52th birthday in mid-August before the fall semester rears its head.

A final note: while I need to update my blogroll, note the blogroll of Rick Telberg and "CPA Trendlines" through the link in the title. While Michelle Golden still sets the blogroll standard, Mr. Telberg is to be commended.

The National Conference of CPA Practitioners (NCCPAP) recently held a meeting with members of the House Ways and Means (tax writing) Committee and the Internal Revenue Service. Stated priorities of the NCCPAP include "above the line" deductibility for both long-term insurance care premiums and tax preparation fees (the latter dependent on disclosure by preparer of his/her/their tax ID number) and adjusting the 1041 and 1065 extension date to September 15 to avoid conflict with the 1040 extension date. Issues discussed with the IRS included the 1041/1065 date and recent modifications to Section 121 (principal residence gain exclusion).

Was interested in the priorities of the NCCPAP, I have seen no discussion of any of these issues before (although I admit to being behind on blog reading). Although not a bad idea, the proposed above the line deductibility of long-term care insurance seems a long shot with the 7.5% general floor on medical deductions. The tax prep fee idea might have a chance of getting "half a loaf," I could conceive of Congress reclassifying tax preparation fees as a miscellaneous deduction NOT subject to the 2% AGI limit.

Friday, May 23, 2008

A survey of CFOs and other top financial professionals indicated while the minority of respondents willing to adopt IFRS has grown from 20% to 30%; many respondents had not decided or felt that they were not yet ready. Not surprisingly, the biggest impediment was uncertainty about the complexity and cost of converting to IFRS. The AICPA, Deloitte and Ernst have started IFRS websites with AICPA attempting to facilitate practitioner understanding while the CPA firms attempt to get college text writers to include/improve IFRS coverage.

Perhaps the most useful feature in the article was the links to the the AICPA and CPA web sites. Also of note (and previously predicted here)--the AICPA DOES plan to incorporate IFRS standards in future CPA exams.

Wednesday, May 21, 2008

The American Institute of CPAs honored a one-time CPA who now runs a Nashville grocery and a Wisconsin CPA firm with publice service awards at its Spring Council meeting. Michael Shmerling of Choice Food Group founded Abe's Garden, which is building a dementia-oriented facility in Nashville. Although Shmerling has not practiced for over a decade, he asserts that he still practices the ethics of the profession and challenged other CPAs to get involved in community service. Schneck Business Solutions of Appleton, WI was awarded the business citation for involvement with a variety of volunteer groups and its fundraiser for a children's hospital.

Congratulations to each of the winners and to those others who actively contribute to their community, even when it does not receive immediate publicity.

Monday, May 19, 2008

Government officals from "next door" Kentucky are breathing easier after the U. S. Supreme Court voted 7-2 to overturn an appelate court ruling and allow the Bluegrass State to tax earnings on municipal bonds of other states while exempting earnings from bonds of the commonwealth of Kentucky and its municipalities. Judge David Souter said that the practice was permissable and did not constitute unfair protectionism.

Have to say that the Supremes reached a common-sense solution here. The result may be a little disappointing to tax practitioners; it means that state taxable interest and federal taxable interest usually will differ if the taxpayer either owns municipal bonds or a mutual fund with these bonds.

Saturday, May 17, 2008

The Securities and Exchange Commission voted to establish a three-part requirement for use of Extensible Business Reporting Language (XBRL) for publicly-traded companies. The top 500 worldwide companies with a "float" exceeding $5 billion must use XBRL by the end of this year. U. S. companies using U. S. GAAP and with "float" in excess of $75 million must use XBRL by the end of 2009 while all companies which are publicly traded in the U. S., including those using IFRS standards, must use XBRL. One surprise, the SEC decision requires that both annual and quarterly reports must use XBRL.

Running isn't much of an option (except perhaps to go private) for there appears to be nowhere to hide. Publicly traded company auditing during the next few years will have a lot of hard work, a sizable amount of relearning and real opportunities for new CPAs who can grasp the impact of XBRL, IFRS and other massive changes in financial accounting and auditing.

Tuesday, May 13, 2008

The Inspector General of Tax Administration for the U. S. Treasury (TIGTA) found that complex laws caused the Internal Revenue Service difficulty in administring the alternative motor vehicle tax credit. Although IRS in general provided correct information, taxpayers incorrectly claimed credits which the IRS in some cases missed because of poor controls. Specific concerns included leasees of hybrid vehicles taking credits, credits claimed for non-qualifying vehicles, insufficient documentation or overstating the qualifying amount. The TIGTA asked the IRS to clarify instructions for Form 8910 (where the credit is taken); to consider requiring sellers of alternative fuel vehicles to add documentation at time of sale related to the credit and to correspond with taxpayers if the Form 8910 is not satisfactorily completed. The IRS agreed to implement these findings.

Another case where tax complexity is causing an unsatisfactory result in tax compliance. I'm sure that this is too much to hope for, but it would be nice if Congress required that before a new law was implemented, there would be a trial period to assure that the law was widely understood.

A Catalyst Research Study of 1424 respondents found that present CPA diversity programs have not been as effective for Latinas and African-American and Asian women as they have for men of color and white women. Survey respondents perceived double standards in performance reviews, limited expectations, reduced professional development opportunities and fewer high-visibility assignments for women of color compared to other accounting firm personnel of similar rank and responsibilities. One black lady who was a senior manager was saddened to see only a couple of other African-American women in a large meeting of managers. Catalyst vice-president Katherine Giscombe said that good intentions might not be working because firms were counting on a "one size fits all" approach to diversity.

A tricky topic; my own record here probably has room for improvement. Perceptions of double standards are one thing; reduced access to professional development, client personnel and high-visibility assignments however are very troubling. While larger CPA firms have clearly moved forward from my "Second Eight" experience in Memphis in the late 1970s when pockets of blatant racism could be found; expectations for diversity are higher today--and not just from white women and people of color.

Friday, May 09, 2008

In a four-hour meeting, the Treasury Department came up with a list of recommendations to improve the audit profession; these initial recommendations will have a month-long comment period before being issued in final form. Initial recommendations include: market-based curricula and content in accounting undergraduate and masters' programs, greater representation by minorities in the profession, greater development of fraud detection skills, clarification of the responsibilities which auditors have for fraud detection (special emphasis here on improving PCAOB/SEC guidelines on auditor responsibilities); reducing barriers to smaller auditing firms for auditing publicly-traded firms and annual ratification of auditors by shareholders of all publicly-traded companies.

The Treasury clearly decided to speak out on a wide range of audit-related issues, from auditing education to fraud. While there are many worthy goals, such as greater minority participation or greater auditor competiton, it is far from clear to me HOW the Treasury intends to accomplish these goals--and frankly, it would be scary and a overreach of Federal Government power if the Treasury became authorized to implement these goals. Finally, I am not sure that all goals are internally consistent. One example, Sarbanes-Oxley requirements are a barrier entry for smaller CPA firms attempting to develop the expertise to test internal control.

Monday, May 05, 2008

XBRL US recently announced that they have completed taxonomies for U.S. Generally Accepted Accounting Principles (including Notes to Financials) and delivered these with associated preparer's guide to the Securities and Exchange Commission. The SEC will hold an open meeting on the 14th regarding a proposal to require XBRL for publicly-traded companies. Coda CEO Jeremy Roche believes that the SEC should mandate XBRL but allow a two-year transition period.

The SEC meeting a week from Wednesday certainly will get attention if the proposal to require XBRL for public companies is approved. At present, I tend to like a slight modification of Roche's position: requirement of XBRL with two years for most publicly-traded companies but three years for small capitalization public companies (in this case, revenues under about $250 million).

Friday, May 02, 2008

Jeffry Thompson has been named the new chief executive officer of the Institute of Management Accountants, replacing Paul Sharman. Thompson previously directed research for the IMA and prior to that was the CFO for AT & T. One of Thomson's special concerns was the increased regulatory environment facing management accountants.

Congratulations and best wishes to Mr. Thomson. The IMA is an important professional group and I wish it great success.